tv To the Contrary With Bonnie Erbe WHUT September 12, 2009 10:30am-11:00am EDT
>> bonnie: this week on a special edition of "to the contrary," an in-depth look at the benefits of and the barriers to working longer. [ ♪music ] >> bonnie: hello, i'm bonnie erbé. welcome to "to the contrary," a discussion of news and social trends from diverse perspectives. up first, the benefits of working longer. longer life expectancies, shrinking corporate pensions and rising medical costs are creating the need for many americans to work longer and save more for retirement, especially during a deep recession.
earlier this year we took a look at the financial and psychological benefits for americans who work longer. mary turner is 63. although she could have started receiving retirement benefits as long as a year ago, this mother of eight still works part-time. and does not take retirement benefits. >> need the money. bills. i really have to survive to make -- to survive. >> bonnie: today, more women are like turner, choosing to work into their retirement. in her book, "working longer," professor alicia munnell argues that current demographic and financial trends prove american women and men must work longer to avoid poverty in old age. >> the case for working longer is really strong. it does three good things. one, it shortens the period over which you have to use your retirement assets to support yourself.
also, it means you don't have to claim social security benefits early, and if you claim social security benefits later, you get a lot more. for example, if you claim at 70 instead of 62, you get 75% more. and third, it allows, in good times, for your 401k accumulations to grow and earn interest. in bad times like this, it allows for -- sometime for asset values to bounce back. >> so when we had age 65 at the age that we were retiring, many of us were dead by 75. now many of us would live to 85 and 90. it's a longer period of time in which one might be mentally active and physically active and could work, and it's a much longer time in which one needs to have finances. >> bonnie: and there are huge psychological and health benefits to working longer, too. a 2005 study in the british medical journal followed 3500 shell oil employees. those who retired at 55 were
twice as likely to die during the next ten years as people the same age who continued to work. >> the benefits of working, i think, just make you feel -- make me feel good. you know, to be around different people. and just something to do. your mind, you know, you have a clear mind. you just keep up with what's going on. >> everybody gets things out of work that they don't get out of being at home, or on the porch, as we used to say about retirement. one of the things we found in our study is that the hourly workers like working. they like the social network that they find at work. they like the structure that it provides to their day. they like being out of the house. >> bonnie: the average american now works until age 63. but professor munnell says data show that a person should stay in the workforce until the age
66, which was the average age of retirement in the early 1960s. professor munnell is calling on the government to raise the eligibility age for social security benefits to help convince more americans to work longer. >> so until about 1990, the trend was for an earlier retirement. since then, we really have seen a reversal for both men and women, and it's due to changing incentives within social security, a movement away from the old-fashioned defined benefit plan, towards 401k plans which have no retirement incentives. i think things like how expensive health health care has become means that people want to stay with their employers at least until they're eligible for medicare. so the incentives now have changed to keep people in the labor force longer. >> bonnie: retirement security is especially important for women, because even today nearly 30% of single women who represent a majority of households at older ages are classified as poor or near-poor.
this is a product of several factors. women tend to work part time more often than men and go in and out of the workforce more during their lives. they also, on average, earn less than men. but after culling through tomes of government data, professor munnell found that women who continued to work until their mid-60s or beyond didn't retire in poverty. >> generally, women's earnings have not been very strong. so many women are dependent on their husbands for social security benefits and any sort of benefits from their employer. but women are generally also three years younger than their husbands and they tend to live three years longer, so that many women end up as widows. and when they become widowed, what happens is their social security benefits fall by somewhere between a third an a
half. when the husband dies, you see the income drop sharply. >> bonnie: but there are some catches for older workers trying out of work -- the bureau of labor statistics reports workers ages 45 and older form a disproportionate share of the hard-luck recession category: those out of work more than six months. older laid-off workers remained out of work more than 22 weeks on average last year, compared with just more than 16 weeks for younger workers. when they find work, they typically experience a much steeper drop in earnings than their younger counterparts. there's one group for which this is not true: the self-employed. they earn more than other americans on average, and since they run their own companies, they decide to work however long they like. >> people who are self-employed in part because of the kinds of control they have over decisions, of when they work and how they work, they tend to
extend the number of years where they are working. >> bonnie: in her book, "working longer," dr. munnell cites data showing self-employed men expect to retire two years later than other men. but self-employment has no effect on the expected retirement age for either married or single women. this is probably due to the fact a much smaller percentage of older women are self-employed. that said, the major challenge in persuading women to continue to work into their golden years may be to boost their presence among the self-employed. or it may be to encourage women to find employers who offer flex time which allows them to gradually reduce work hours as they age. as for mary turner, she says she may retire in a few years, but she'll continue to work or volunteer outside of the home for as long as she can. >> and i think, too, that older people today really just want to work. it helps your mind, you know, to
think. it just makes you feel better about yourself. and i think even if it wasn't the money, i know i would. >> bonnie: so victoria lipnick, welcome to the panel. is the recession forcing older people who have planned on retirement because they've lost so much money in savings in the stock market to work longer, in essence will this recession in a way cure the problem? >> it's a painful cure if that's the case. the short answer to your question is yes. i mean, the recession is going to force people to work longer. people have lost a tremendous amount of wealth in their retirement funds. but women as your piece said have to work longer anyway. they come in and out of the workforce because largely of their care giving responsibilities, because they have children, they assume most of the elder care responsibilities they want to earn more in their jobs, and
women have a longer life expectancy. they have to have a lon larger retirement to sustain them than the men. >> i'm sure all of the women looking into retirement, bonnie say well, thank you, it's good for my pocketbook and it's good for my health! but the fact is that those are probably just the people who most want to retire. and it really goes to something that occurs much before they get to retirement age. that is, failure to treat them, for example, as part time workers with some respect, as part time workers, some respect for the family and for the work they're doing. one of the more controversial parts of the stimulus package was that there was a requirement to get certain kinds of money for unemployment insurance that you -- that the states begin to except part time workers where there were governors that said i would rather not take the money at all than to begin to reward
part time workers. they're not thinking about the family! they're not thinking about women! >> and i think a lot of folks who are 62, 63, if you worked a few more years it might not pass on such a huge debt to your grandchildren. the fact is, this is ann a huge issue and right -- and this is a huge issue. if you increase benefits at the part time level you are going to make it tougher and tougher for employers to have part time employees and lose these jobs that these women need. >> bonnie: up until the 90s we were lowering the age of retirement, but in the '70s or so, much more jobs were built on physical labor. and now we have a lot more professionals and office workers and i'm wondering if the dream
of a few years ago, they get board anboored and need to go bo work for psychological reasons. >> 55 is the new 35? >> bonnie: new something, i don't know about that. >> something like that. but in terms of the retirement age, the days that people retiring at, you know, 55, 60, they're gone for two reasons. one is interest, people have a lot of life ahead of them to lead and they want to be involved in the workforce and the second is purely financial. keep in mind part of our retirement system is social security. people can take social security benefits at age 62. that is going to go by the way side. social security cannot be sustained at that retirement age. >> bonnie: quibbling, sam bennett. >> the hidden story is about self employment for women. the president of the chamber of commerce, a woman, deplord the fact that less than 5% of the
government contracts that are supposed to be going to women in this country are going to women in this country. >> bonnie: women-owned businesses. >> women-owned businesses. encouraging people to be self employed, which i am, women who own their own businesses earn more, they work longer and can contribute to that economy that they can build. >> bonnie: from the benefit to the barriers. while more americans need to work longer, not all are finding it easy to stay employed. in the second segment of our two-part series, we examine the tax, bias, and legal barriers for americans who want to work longer. in part 1 of this series, we showed that increasing life expectancies, shrinking federal and personal retirement assets, and a high level of job satisfaction for older americans are combining to lengthen the number of years americans stay
in the workforce. the recession has also forced many americans to work longer, as only 13% of workers questioned this year told researchers they were very confident they had enough in savings and pensions to be financially comfortable in retirement. but to work longer, workers must overcome a number of significant barriers. first, there are the cultural ones. age bias or ageism is just as prevalent in society as the other isms, but perhaps more difficult to detect. >> there's certainly some indication that some outdated and old fashioned attitudes, biases if you will, about older adults persist. so it can be a challenge particularly for older adults who are in their job search process. there have been a number of studies conducted showing that it takes older adults longer, and they tend to get fewer interviews, if the only thing that's different is their age. so it certainly can be a more difficult job search process for them.
>> bonnie: age bias is very hard to prove. but there are data that show it is quite real. the metlife market institute produced a survey showing older workers most frequently gave reasons suggesting or implying age bias was the reason why they failed to get hired. the older the job seekers were, the more often they identified bias as a hiring barrier. in 2005 an economist at the massachusetts institute of technology sent out 4,000 hypothetical resumes for women posing as job applicants and found it was much tougher for job applicants over age 50 to get interviews than it was for those under 50. baby boomers, as a large cohort of americans and a trend-making generation, expected that age bias in the workplace would fade as they aged. but in fact it is taking longer than anticipated to eliminate societal age bias. legal barriers could be resolved more quickly, but would require changes in the tax code and the
nation's federal laws. the first is changing federal law to allow older employees who spend most of their careers as full time workers to transition to part time work or phased retirement as they enter their 50s, 60s or even 70s. >> we do not have a system that is set up that actively encourages flexible work arrangement, that actually covers working part-time. >> bonnie: the obstacles are in the tax code and erisa, the employee retirement income security act. some of them apply to older part time workers who want to tap into defined benefit retirement plans, while continuing to work part time. >> the tax law actually prohibits only the distribution from defined benefit plans prior to age 62. that is, if you are 60, and what you would now like to do is figure out a way to work from 60
to 75, or maybe you're 58, and you want to do from 58 to 75, but you want to do it in a more part-time capacity, obviously, if you go part time, your income will get lower. if you want to access your defined benefit plans in some way, you could not do it under the current tax code and under erisa. you just couldn't. you could go part time, but you could not access your defined benefit plan. >> bonnie: while so-called defined benefit pension plans -- pensions that promise retirees a certain amount at a certain age -- are not offered as widely as they once were, they still provide the primary source of support for just more than 30% of workers questioned by researchers in 2006. that is down sharply from the percentage of workers who received and relied on them a decade or two ago. defined benefit plans have been displaced by 401ks and so-called sep iras, which allow employees to save for retirement
and for companies to match or contribute to employees' savings and the savings grow tax-free. but those plans are less generous than defined benefits plans. yet another legal obstacle is that many employees are eligible for early retirement benefits that are subsidized by employers. that makes it attractive for employees to cash out their early retirement benefits and then try to return to work for their employer as independent contractors. but employees and employers may be skirting the law with this approach because the tax code treats employees and independent contractors very differently. >> it's about giving employers more guidance, and therefore more security, that they can offer these plans, not be in violation of erisa, not be in violation of the tax code, not be in violation of age
discrimination laws. i think it's all doable, but it requires a look at all those laws to see whether they're making sense for this particular type of program. >> bonnie: then there's health care coverage for older workers also phasing into retirement. federal law prevents employers from saving on health insurance premiums for older workers who want to continue to work part time into their 60s, 70s and beyond, and who want to keep their employer-paid health care coverage. federal medicare rules were originally set up to prevent discrimination against older workers. but in today's changed work environment, they work against people who want to transition from full to part-time work or into so-called phased retirement. why? they force employers to continue to pay for the full cost of health insurance for older workers, a much bigger expense
than for younger employees. the rules do not allow older workers who are covered by company-sponsored health insurance to use medicare as their primary coverage. >> if you're working, the employer has to pay. that can be a disincentive for the employer. we paid into medicare. why can't i just supplement your medicare? no, that's not the current rule. medicare is the secondary care -- payor. the employer has to pay the full price of the health insurance if they're going to do that, and medicare will pick up the extra costs. >> bonnie: in fact, there are so many legal and tax obstacles to going part time or working past retirement for the same employer that professor feldblum's group is working with the obama administration to revise many or all of them, all at once. >> employers are needing to navigate around a bunch of complicated walls, instead of the government saying, we would actually like to make it easier for people to work from dive 75.
that should be our governmental policy. let's look at everything we can do to make that easier. so that would include using the bully pulpit you know of the white house, of the administration, to say we should have quality part-time jobs. >> bonnie: so joan kuriansky, welcome to the panel. how long do you think it will take for congress and the administration to simplify the laws so there aren't all these problems for the employers? >> well, clearly there's a long time challenge. i think the more employers begin to appreciate the importance of flexibility to help them do their work the quicker we're going to see this change. i think the real challenge is going to be what is the economy evolving into what other kinds of jobs that are going to be available here. and within that, what is the opportunity for older workers to
continue to be in the workforce. there's no question, as that segment indicated, that for individuals and families, it's essential that workers continue to work beyond the proverbial 62 years of age. and in fact studies have shown if you even work five years more, your savings can increase by 50%. >> bonnie: did you see claims of discrimination growing while you were -- >> age? >> bonnie: of age discrimination going while you were at the eeoc? >> well actually, while i was at the eeoc and subsequent to my departure they had skyrocketed. they had over 100,000 charges last year and about 25% of those were age related. it's a huge spike. lots of restructuring when the economy is down. charges go up. a lot of the restructuring, for some reason a lot of people that are older than 55, maybe they don't have the transferable skills. maybe we should look at that and
focus how do you had a. >> if you look at the corporations all the buyouts now are because of the economy, they're the most expensive, their health care benefits are at 55 and as soon as they get older, they hire at two or three grade levels lower. because it's going to save the company money. >> the boomers engineers in my company are all going to retire at the same time. and with them goes institutional memory training that we vested d in. and our competitiveness will depend on my being able to keep them beyond retirement and to recruit workers to replace them. he says whatever i need to do because weigh don't have enough -- we don't have enough engineers in the country, i willing make sure we keep the workers that we have. employers may be downsizing -- >> bonnie: that is one field
where -- and you know, we're short, but the average situation is, just the opposite of that, and congresswoman edwards, is congress -- you know, you're in congress. are they talking about changing these laws? is there any momentum in that dpreks? >> there are conversations that are beginning. i think you know at least part of this has to do obviously with what we do with health care. particularly for those between age 50 and 65. we already know this is a huge gap. >> bonnie: in the president's health care reform that the house and senate are working on now, are they changing it so those 65 and over can just go on medicare as opposed to continuing to have their employers being -- pay for their primary health insurance? >> i think that is what we're looking at, how do we restructure so the 50 plussers, it's really from 50 to 65 that you have this huge gap of
underinsured, for people who are in business on their own, this is part of the conversation on how we're going to reform health care. i think it's this group of employers that's losing its educated and skilled workforce that will actually drive us to the conversation of how we restructure. all these laws that actually predated a group of workers who are working for much longer than we ever anticipated. >> bonnie: we hope you enjoyed this special edition of "to the contrary." next week, a new push to make english the official u.s. language. please join us on the web for "to the contrary extra." whether your views are in agreement or "to the contrary," please join us next time. caption technologies, inc . --www.captiontech.com--